Pitt Street Research has initiated coverage on Melbourne biotech company Exopharm (ASX:EX1), declaring it is currently significantly undervalued and could be re-rated by the market.
In a 29-page research report, Pitt Street Research lauded Exopharm’s technical know-how and manufacturing capability and novel proprietary technology related to exosomes, nano-sized bubbles secreted naturally from almost all cells, which scientists believe have vast potential for delivering precision medicines.
“With its foundation LEAP technology, Exopharm has arguably the world’s best tools for manufacturing exosomes,” Pitt Street analysts Stuart Roberts and Cheng Ge wrote.
Exopharm has the capability to create a high number of naïve exosome products suitable for hard-to-treat diseases, and is also in a strong position to enter “lucrative partnerships”, they wrote.
The company’s patented LEAP technology, used to purify exosomes so they can be used in medicine, overcomes a key challenge that until now has held back exosomes as being used as drug delivery agents.
Exosomes could be a better delivery agent for delivering mRNA treatments such as the vaccines developed by Pfizer and Moderna, the analysts say. Those vaccines use lipid nanoparticles – essentially artificial exosomes – to protect the RNA from being attacked by the body’s immune system, but LNPs have delivery issues that exosomes can overcome.
Exopharm can produce a billion exosomes for just $10 – and plans to bring this cost down to less than five cents per billion exosomes, the report says.
The company has a “massive opportunity” in engineered exosomes, according to Pitt Street, with its business model providing for multiple revenue-generating channels.
Exopharm could license its technology for commercial use, transfer its technical know-how to pharma and biotech companies or sell its own exosome products, the report says.
In the paid research report, the analysts also took a look at Exopharm’s experienced management team, noting the success of its chief executive and founder, Dr Ian Dixon, who has a track record of successfully commercialising medical technologies.
Other members of the management team have experience at noted companies such as Haemonetics, McKinsey and Company, CSL, Bayer, Opthea, PolyNovo and Zoetis.
Looking at previous multi-million biotech deals in the sector, the analysts value Exopharm shares at between $2.80 and $4.71 – a significant upside to the 73c that EX1 shares were trading at Tuesday morning.
This article was developed in collaboration with Exopharm, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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